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ICICI Securities Report
Jindal Steel and Power Ltd.'s Q1 FY21 earnings were better than expectations with adjusted Ebitda at Rs 22.6 billion against Rs 20.1 billion expected. While standalone operations (Ebitda surprise of 14% ex gains from insurance) explain majority beat, the trends in topline and rural marketing costs were in-line with expectations.
The key surprise was lower other expenses, which do not allow the beat to be extrapolated to peers. Around 80% QoQ increase in pellet sales also helped. Thus, the standalone print made light of what was supposed to be a tough quarter with Ebitda per tonne nearly flat, as realisations dropped approximately 11% QoQ.
Jindal Power also surprised (22% beat), driven by lower coal costs, while Oman spread contraction QoQ was sharper than expected. In what was expected to be the worst quarter of FY21, Jindal Steel and Power could manage to delever by approximately Rs14 billion. Oman asset sales will accelerate deleveraging. We maintain Buy stance with a target price of Rs 213 (FY22E price to book of 0.62 times).
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